Starting a Business: Advice from the Trenches

by Kevin Potts

40 Reader Comments

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  1. Kevin, Seeing that I read your article now and not 6 months ago, I am curious if you have any advice for college grads who decided to start their own business anyway.  My partner and I have been in business for about 3 months now.  He graduated this past may and I will be graduating in December.  Knowing that street smarts come from life expereince, are there any points that you could share with us from your own youthful start experience? Thank you, David Ellenwood
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  2. This is a great article!  Thanks for writing it. =]
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  3. I liked the article, especially the part about the business plan.  From my experience that is probably the most important thing to do is plan exactly what you are doing.  Especially when you are a computer consultant.  I mean if you think about it, really what is a computer consultant?  That should be clarified in writing, if anything just for your own understanding. Your advice about having a partner seemed to make a lot of sense, however pretty much every business book I’ve read has advised to not have a partnership business structure because of all of the likely problems.  When you are talking about having a 2nd person do you also mean to organize as a partnership?
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  4. I agree with all the points of this article, which doesn’t happen very often.  Full of good information and great points.  Thanks for all the advice, I’ll take it heart when I’m starting a company to overtake Microsoft!
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  5. This is a great article on the steps necessary to both create a business and succeed with it.  Kevin, thanks for the insight.
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  6. This is a very thorough and well-written article full of great advice. Hope to see more like it in the future. Great job.
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  7. Thanks for all the positive feedback so far.  Blaine, to answer your question about partnering, I was referring more to the personal aspect of it than a business aspect.  I understand the risks in setting up a legal partnership, and its really a matter of weighing the pros and cons for your particular situation.  From my experience, having that extra person (or people) just makes the business machine work better. David, since you are starting out relatively young, I must reiterate the point of proper pricing.  Don’t bend to whiney and pushy clients; many will try to take advantage of your youth, but if your stuff is good, they will pay, and they will come back. Make sure you and your partner have a clear direction for the company.  Where will you be in one year, five years and ten years?  Plan ahead.  Running a business day-to-day with no eye to the future will almost guarantee dissatisfaction in the long run. Also, if you hang in there long enough, most small businesses will get a Big Break (tm).  This is the client or project that takes your business to the next level, whether finacially, professionally, or reputation.  When this job comes (you’ll know it when you see it), jump on it and don’t let go.  Successful businesses learn how to create Big Breaks (networking mostly), and continually use them to grow the company. Hope this helps.
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  8. You said having a partner is good, but how many do you think is too much? I belive a small group of maybe 5-6 people would be a good mix, each having their own specialities. I also belive this might be better financially, being as many people could work less and get more done than just one or two people.
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  9. domain names in the section “File for a Fictitious Name”. Many start-ups think of a great name and register it, only to find that the suitable/matching .com is already taken, so take that into account when selecting a company name. Also, not sure about the US, but in the UK if you class the purchase of the domain name as a business expense and then dissolve the company at a later date, you will NO LONGER own the domain as it belongs to the now dissolved company. I know because I made this mistake. Either a) transfer the domain before dissolving your company, or b) class the purchase of the domain as a personal expense so it does not become one of the assets of the company.
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  10. Great article.  I must have missed the section on great contracts for web/graphic design.  You mentioned creativepro.com. How about creativepublic.com?
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  11. I’m actually taking an accounting class right now at the Art School I go to. If you’re in Art School, I would highly recommend it. One of the things that was stressed was to NEVER go into a partnership - meaning in the business-entity sense of the word. Look into an LLC instead. This advice seems sound, and coincidentally at one of my first jobs were I was pizza boy was owned by a partnership and both partners told me it wasn’t such a hot idea, half-baked if you will, a bit burnt at the corners (ok, pizza puns aside). Listen to the pizza makers! You won’t regret it.
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  12. This is excellent advice to start. Never go into business with family. Never go into business with a really good friend. Do with an acquaintance - but not a really good friend. If you start with a partnership - make sure one or the other owns 52% or a majority of the company. If you don’t and things go sour, then you will have a very difficult time either walking away, retrieving your finances, or getting rid of the other person (should it come to that). Also make sure roles are highly defined - and you never walk into that other persons role. Business plan is essential - accounting too. Remember all business is is: Need - Satisfy - Benefit. Thanks for reiterating business school for me!
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  13. Having run a successful small design partnership with two others for 3 years now, the article tells you exactly how to do it.
    Don’t skip the fine details thats the most important. And above all be honest with your clients. It’s better to say “i dont know but i’ll find out” than “sure we can do that”.
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  14. > Undercharging hurts the industry in general as
    > well; undercharged clients come to expect and
    > request absurdly low prices. I can’t agree more with this. Several months ago I signed up to rentacoder.com, to get some side jobs. I managed to finish 3 until I got fed up with ridiculous bids. Majority of posters set maximum bid to unreasonably low prices. For example, there were people asking for a copy of eBay web site for 500$, or simple CMS for 50% etc. What is even more astonishing is that such offers got bids. Some coders really don’t value ther time.
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  15. Great article. One point I’d like to add—another important aspect of starting a business (especially if you’re a one-man-band) is to strike a balance between promoting and actually doing the work. Sometimes new businesses can get caught up in the doing, which means the business will suffer in the long run (or at least miss out on opportunities to develop). Sometimes you just have to turn work down in order to free up some time for business development.
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  16. Great article. I also agree with some of the other comments about being cautious with partnerships.
    For my input, I would like to also include the fact that in the United States, trademarks for company names also extend into domain names. That means that if you start a company named XYZdesigns and someone is holding on to that domain name and is clearly not using it for business purposes, you can legally take that domain name from them. First I would suggest e-mailing the domain holder and asking them nicely if they would sell the domain to you. They may be happy to sell it for a fair price. If they refuse to sell or are asking for an unreasonable amount that no sane person would give, then you can go the legal route and take it from them in court. The 1999 Anti Piracy Act covers the base of what I’m saying here.
    So moral is, just because the domain for your new company is taken, doesn’t exactly mean that the name is truly being used for business purposes. In fact, in some of the cases I’ve see, it’s being held by a teenage cyberpunk who thinks he’s going to become a millionaire from selling it.
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  17. It was a good shot in the arm to read your article. I am now in the process of starting up a small design company and all the things you listed were true. It’s really tough but I would much rather sweat for myself than for someone else (‘cause you’re gonna sweat either way!). I would really love to see more articles of this type in ALA along side the invaluable techno-stuff as well. My thanks - Marc
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  18. Everything you have encouraged in this artical I can second from personal experience. My partners and I pared all this down to the phrase, “We aren’t playing Corporation.”  We did everything we could to run our business as an actual business and not as an intense hobby. On office space, I would say this: stay in the basement as long as you can get away with.  If you can maintain good business and work habits in the confines of your basement, garage, or converted spare bedroom the financial benefits are worth it.
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  19. A very well written article, especially in regards to writing a business plan. That is the one thing which has kept my business alive, I am eternally thankful I forced myself to write one. I have a constructive comment in regards to having a partner. I have had several bad experiences with partners, and what I have come to learn is that most partnerships are based out of necessity; you NEED the other person for something and they NEED you. While you pointed out the good portions of having a business partner, there still are downsides - Such as greed, or that ‘necessity’ for the other person wearing its self out. It is very easy for bad blood to form. If you do start a venture with a partner, make sure that roles in the company are clearly defined, and that no one person will feel that he or she is doing ALL of the work. It is also a very bad idea to start a (serious) business with a good friend; conflict seems to come quickly, and more often. While having a partner is sometimes good or necessary, any entrepreneur should consider all angles of any situation he or she is walking into. Regards,
    Michael
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  20. If you’re really short on cash or in an expensive area and can’t afford Office Space but you have to meet clients then look out for Office Space available on a day-by-day rental basis. There are some firms out their who will rent you ready made office space on a short term basis for meeting clients, etc. so you could still give out that pro image even on a shoestring budget. Take a look around your area, you might just find one of those companies.
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  21. I’m interested to see any web dev contracts available out there. I sell a commercial product including a web development contract and like to see what others are using. One comment about business plans: my small business has been thriving and growing for a couple of years now, though I’ve never had a formal written business plan. I definitely have specific written goals and plans, and it may be that they are serving some of the purposes a more typical “business plan” usually serves - but I have nothing I would show to anyone else. This is not to disagree with your advice, but maybe just to point out that there are exceptions. Or, who knows - maybe I’d be drowning in my own success if I *did* have a formal business plan!  :-) Patty
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  22. Good article! Anyone heard or used the Web Design Business Kit from www.sitepoint.com ? Link: http://www.sitepoint.com/books/freelance1/ Is it worth the $197 ?
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  23. The advice on the business plan is good.  But just making a business plan is not enough to aid success. Once you have made a business plan you must check it at least once every two quarters.  Are you sticking to your plan? Should your plan be changed to meet the trends of your current business trends and knowledge?  By reviewing your business plan, and modifying as necessary, you will help to keep your business on the right track providing your customers with more consistent reliable services and products.
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  24. This is an excellent point.  Most experts actually recommend reviewing it once every quarter, and revising it if necessary.  A business plan is never set in stone; it should be constantly morphing to your business needs and goals.  Reading through articles in Inc magazine, its amazing how many CEO’s, CFO’s, etc rely on the business plan, and how they are constantly rewriting them for future growth.
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  25. <q>What is even more astonishing is that such offers got bids. Some coders really don’t value ther time.</q> In our business, you’ve got a lot of teenagers operating out of their bed room in the attic. Nothing wrong with that, but it lowers rates drastically, as they have no expenses and can afford to take largish contracts for free or little money.
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  26. I know several one-person companies who share office space. The pros: you’ve got company (working for yourself can get lonesome very quickly), you share the costs, you can perhaps afford a classy looking reception area. Cons: as with a partnership, but with lower risks, of course. The type of sharing I see most is where one entrepeneur rents the space for growth, and lets part of their office to other freelancers. Another method is to create a legal entity (foundation or some such, ‘stichting’ or ‘vereniging’ in the Netherlands) that rents the office space and lets it to the members.
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  27. If there are any Dutch readers here: In the Netherlands, you can deduct an office at home as a business expense, depending on some variables that your accountant will fill you in on. Keep in mind that all kinds of things you take for granted as an employee and consumer in the Netherlands don’t fly once you’ve become independent. You really will be on your own. The tax office (‘belastingdienst’) and Chamber of Commerce (‘Kamer van Koophandel’) are your friends, especially the former. Visit them as they’ve got loads of useful advice. The latter will in some cases actually try and discourage you from starting a business as part of their spiel. Make sure you come across as if you mean it. The Usenet newsgroup nl.ondernemen is NOT there to spam your fellow entrepeneurs with your brilliant product, but DOES provide a place where other entrepeneurs will listen and dispense advice. Read up in http://groups.google.com/groups?q=group:nl.ondernemen before you start posting. Keep in mind that for several organisations that could spell big trouble for you (belastingdienst, GAK), you need to look like a business: have business cards, stationary, clients (if you rely on one major client, the GAK will conclude that you are their employee and start taxing them accordingly!), spend most of your time on the job, advertize, etc.
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  28. Most states have “Business Incubators” run by local economic development agencies that startup companies can make use of.  Contact your state’s economic development agency and the National Business Incubation Association (http://www.nbia.org/).  They can help with suitable accomodation initially, assistance with business planning, accounting and legal advice, and so on. Also, your state’s ecomonic development agency - and in some areas, county or similar - often has a lot of assistance for people starting their own business.  They can provide lots of valuable advice, often run free seminars, and can be a source of useful grants or low income loans.
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  29. Anyone heard or used the Web Design Business Kit from www.sitepoint.com ? Link: http://www.sitepoint.com/books/freelance1/ Is it worth the $197?
    Books that tell you the secret formula to success, usually tell you to sell a book that tells others the secret formula to success. There are no formulas beyond hard work, talent, business smarts, perseverence, high quality suppliers and heaps of luck. Rest assured that if there were some secret method, the ones that knew about it wouldn’t be selling books about it. Speaking of high-quality suppliers, what I missed in the article is the importance of outsourcing; you don’t need to have everything done by a third party, but if a third party can make you look better (or make the product better), you’d be foolish to do it yourself.  
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  30. This is an excellent point.  Most experts actually recommend reviewing it once every quarter, and revising it if necessary.  A business plan is never set in stone; it should be constantly morphing to your business needs and goals.  Reading through articles in Inc magazine, its amazing how many CEO’s, CFO’s, etc rely on the business plan, and how they are constantly rewriting them for future growth.
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  31. This is an excellent point.  Most experts actually recommend reviewing it once every quarter, and revising it if necessary.  A business plan is never set in stone; it should be constantly morphing to your business needs and goals.  Reading through articles in Inc magazine, its amazing how many CEO’s, CFO’s, etc rely on the business plan, and how they are constantly rewriting them for future growth.
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  32. I’m assuming that you’re in KC. I too enjoy the local Boulevard brew. While I’m not extrememly local, (Topeka) I thought your article was great. I’m 23, and I was seriously thinking about starting my own business here in town. I’ve been working at the local University for a little over one year, and am trying to finish up a degree online. The job I currently hold has given me invaluable experience as far as dealing with people. Being so young and instructing faculty is difficult sometimes. I can’t say enough about that part of the article. I’m glad I read this, because I would have been foolish to dream up starting a business right now. At least I’ll have a guide when I’m ready to continue… Thanks again. Dustin
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  33. In many places you can do business under your own name without having to register the name. You may still need a business license, but you might be able to start out as John Doe, consultant and work that way.
    Another thought on partnerships is to form a partner network. You as a great graphic artist can work with a freelance web designer, a network specialist, etc. You hire them to work for you on a work for hire basis and charge the final work through to the client, perhaps with a little markup. That way you can pull in talent for bigger projects and still stay small.
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  34. Your article has what [in my opnioin] are valid points. I’m learning firsthand the rationale behind the need for a business plan and how a business partner can provide a good balance. I also know the value of experience, my own and others’, in collaboration with new ideas.
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  35. I strongly advise you to schedule regular, say every 6 months or less, revisits to your business plan. Ideally, do this with someone else who will ask you hard questions. One of the lessons* I carried away with me from running my own one-woman business was that I should have revisited my plan regularly and, when I mentally reworked my strategic direction, I should also have considered what needed to be reworked in my plan. In my case, I changed my product line enough that I really should have repeated some of the initial work I did planning & promoting before first opening the business. Talking over my numbers with someone else would probably have helped identify (and call me on) where I wasn’t walking the walk I’d talked up. *(along with “don’t plan to pay yourself for over a year” and “consider what to do if what you think won’t happen, happens e.g. separating from the person providing most of your personal financial support)
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  36. Awesome article! Right from the trenches! However, on searching for those generic forms and contracts on creativepro.com you spoke about, I couldn’t find anything. I wonder if you could find it in your heart and busy day to send me a direct link to these resources? It’d be very much appreciated. Thanks!
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  37. The merit of this article is that it summarizes in a quick read most of what you really need to know about starting a business. Even though the business reality and legal procedures here in Costa Rica are drastically different from those of the U.S., I benefited a lot of reading a book called “The Business Side of Creativity” by Cameron Foote, that delves more in depth into all of these true-to-God issues. I would just add two pointers here for those of you jumping into your own: 1) Make sure you have enough savings to cover at least 6 months’ worth of expenses, both yours and your business’s (you’ll need them - guaranteed), and 2) that networking beats skills every time when it comes to clinch a deal. Or as they say, it is not WHAT you know, but WHO you know, that will get you the big business. You may cry foul, but that’s the way it is…
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  38. This was just the information that i was looking for, with this plan set out i hoping in the future of starting my own bussiness although iam still at school is do beleve that you can start at a young age with part time experenice avaiable when your at school. i would really like to say thanks for writing this article.
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  39. Good article, I’d agree with almost all of it except the part about a partner. If there’s one thing I’ve learned from my business experience - not web related by the way - it’s NEVER, EVER, EVER, UNDER ANY CIRCUMSTANCES WHATSOEVER, EVER go into business with a partner. NEVER. If you feel you need a partner you’re either not ready to go into business or you should think of another of doing it.
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  40. Husband and I are starting up our own one man/one woman computer business. U hit it on the head when u said to get real life expereince before starting a business. When i was 20 i started a business and I was DEFINATELY dumb! It went under and i was left with oweing thousands. So THIS time…26 yrs later..we want to do it RIGHT and will resist the temptation of rushing in and starting. Business plan here we come….....
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